Let-to-Buy vs Buy-to-Let: Key Differences Explained. When moving home or investing in property, it’s essential to understand the difference between let-to-buy and buy-to-let mortgages. Both options involve letting a property, but they serve different financial goals and borrower circumstances.
What Is Let-to-Buy?
Let-to-buy involves remortgaging your current home to let it out, while simultaneously buying a new residential property to live in. It’s a strategy often used by homeowners who want to move but keep their existing property as a rental.
Let-to-buy may be a good fit if:
- You want to keep your home as an investment.
- You need to unlock equity from your current home to use as a deposit.
- You’re relocating for work or lifestyle reasons.
Let-to-buy requires two mortgages:
- A let-to-buy mortgage for your existing home.
- A new residential mortgage for the property you intend to live in.
Visit our Residential Mortgages page for more details on purchasing your next home.
What Is Buy-to-Let?
Buy-to-let is designed for those who purchase a property specifically to rent it out. It’s a popular strategy for investors and landlords.
Key features of a buy-to-let mortgage include:
- Based primarily on expected rental income.
- Often, it is in the interest of reducing monthly payments.
- Requires a larger deposit, usually at least 25%.
Buy-to-let is suitable if:
- You’re starting or expanding a rental property portfolio.
- You do not intend to live in the property.
- Your income meets the affordability criteria.
Explore our Buy-to-Let Mortgages section for full information on eligibility and options.
Key Differences: Let-to-Buy vs Buy-to-Let
| Feature | Let-to-Buy | Buy-to-Let |
|---|---|---|
| Purpose | Move and rent current home | Buy to rent out |
| Mortgages Needed | Two | One |
| Residence | New home purchased | Property rented out only |
| Affordability Basis | Both rental income and personal income | Rental income |
| Typical Users | Home movers | Property investors |
Important Considerations
Affordability and rental calculations play a critical role in both mortgage types. Lenders assess rental income potential and may stress-test affordability using interest rate buffers. Working with a qualified adviser helps you understand your borrowing limits and tax implications.
Keep in mind:
- Let-to-buy is usually time-sensitive due to simultaneous transactions.
- Buy-to-let lenders often require a minimum annual income, even when the rental yield is strong.
- Stamp duty rules apply differently to second properties. Seek tax advice if unsure.
To understand how your existing mortgage, credit profile, or deposit may affect your options, speak to a qualified mortgage broker. Contact us for a tailored review.
Is Let-to-Buy Right for You?
Let-to-buy might suit you if you’re moving but not ready to sell your current home. It can be a stepping stone into property investment without giving up ownership.
It may also benefit those:
- Moving to a new area temporarily.
- Planning to return to their original home in the future.
- Looking to generate rental income alongside a new mortgage.
Is Buy-to-Let More Suitable?
Buy-to-let is a better fit if your intention is long-term investment. It offers flexibility to manage multiple properties and income potential tied to market rents.
If you’re focused on:
- Building a property portfolio.
- Earning rental yield.
- Not needing the property as a residence.
Then buy-to-let mortgages may align better with your goals.
Need Help Choosing?
The right route depends on your plans, income, and risk profile. Each mortgage type has regulatory, financial, and tax considerations. As a whole-of-market mortgage broker, we help clients understand their options in full.
We do not offer tax advice. You should speak to an independent adviser about stamp duty or capital gains implications.
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Frequently Asked Questions
Can I do a let-to-buy with bad credit?
It may be possible, depending on the lender’s criteria and your equity. Specialist lenders are available, but terms may be more limited.
Can I switch from let-to-buy to buy-to-let?
Yes. If you decide to retain the property for the long term, you may remortgage to a standard buy-to-let product.
Do I need two solicitors for let-to-buy?
Usually not, but your solicitor must handle both transactions simultaneously. Timing is key.
What deposit is needed for a let-to-buy mortgage?
Most lenders require at least a 25% deposit for a let-to-buy mortgage. The exact amount depends on the property’s value and your financial profile.
Can I use rental income to support my let-to-buy application?
Yes, lenders often factor projected rental income into affordability assessments. A rental valuation from an agent may be required.
Will I pay stamp duty on both properties in a let-to-buy?
Yes, since you’re purchasing a second home, higher stamp duty rates may apply. Speak to a tax adviser for full details on your obligations.
For full guidance, speak with a broker experienced in complex home moves and multi-mortgage scenarios. Get started here.
